Cell Phone Sales May Also Tumble with PCs in Q4
If you've been reading this blog over the last few days, you'll have noticed our following signs on the panel and graphic chip front suggesting that PC vendors have a glut of inventory which could well mean sales (and earnings) disappointments come the fourth quarter. Now an iSuppli report indirectly suggests that the same slowing pattern may happen among cell phones.
According to the analyst firm, sales have been strong over the last six months for small and medium LCDs, but are set for a Q4 slowdown. The panels are largely used in cell phones, which means that they become a leading indicator of how many units that handset vendors might be looking to both make and sell. This could be a case like PCs, where vendors assumed that business would be brisk at the holidays, and so built more inventory than they might normally. And while you might reasonably expect some drop-off, as many people will have purchased new devices, it also suggests that handset vendors might be getting the same sudden dash of cold water to the face as the PC companies have, causing them to question whether the unconditional good times are actually back:
"Suppliers are preparing for what they believe will be a deceleration in demand in the fourth quarter, traditionally a slower period because of the end of the holiday buying rush," said Vinita Jakhanwal, principal analyst for small- to medium-size displays at iSuppli. "Demand in the third quarter was boosted as tier-1 OEMs pulled in orders for the holiday season. This means that some orders that might have been placed in the fourth quarter occurred in the third quarter instead. Demand also was fueled by the arrival of the Chinese Golden Week (National Day holiday). Given these factors, combined with ongoing economic concerns, panel suppliers in the fourth quarter are reducing capacity and keeping a tight reign on inventories in order to stabilize prices."The strong results in the last six months were also for vendors in Taiwan. Japanese LCD manufacturers fared more poorly and will likely see a 9 percent decline in shipments this year. It's just more evidence that those planning for a rising market to raise their boats had best undertake some strategic scenario planning to see what they would need to do should the economy change for the worse.
Image via stock.xchng user mzacha, site standard license.